Sep. 13 2013
WASHINGTON, DC – A national arbitration panel this week ordered tobacco companies to pay $227 million in disputed tobacco settlement payments to nine states, finding that these states “diligently enforced” regulations concerning smaller tobacco manufacturers that did not sign on to the settlement.
Governors and legislators in these states should use their new tobacco revenues to fund programs that prevent kids from smoking and help smokers quit – programs that have been woefully underfunded in most states and decimated by budget cuts in recent years. They should seize this opportunity to finally keep the promise of the tobacco settlement and use tobacco money to fight the tobacco problem. There is conclusive evidence from around the country that these programs not only reduce smoking and save lives, they also save money by reducing tobacco-related health care costs, which total $96 billion a year in the United States. In short, funding tobacco prevention is not only the right thing for the states to do, it is also in their financial self-interest.
The states that were awarded the disputed funds and the amounts they reportedly will receive are: Colorado ($9.9 million), Illinois ($53 million), Iowa (about $6 million), Maine ($5 million), New York ($92 million), North Dakota ($2.6 million), Ohio ($35 million), Oregon ($9 million) and Washington ($14.8 million). Other states also are receiving additional funds, either because they settled the payment dispute with the tobacco companies earlier this year or because their enforcement of the settlement was not challenged.
We know that well-funded prevention and cessation programs work to reduce smoking and save lives. The latest example comes from Florida, which has made a sustained investment in tobacco prevention. Florida recently reported that its high school smoking rate fell to 8.6 percent in 2013, far below most states and the entire nation (the national rate was 15.8 percent in the most recent equivalent national survey, conducted in 2011). If every state reduced youth smoking to the same low rate as Florida, there would be 1.6 million fewer youth smokers in the U.S. Other states that have invested in such programs, including California, New York and Washington (before the latter virtually eliminated funding for its program), have also cut smoking far faster and to far lower levels than the nation as a whole.
There is growing evidence that these programs also save money. A 2011 study found that Washington saved more than $5 in tobacco-related costs for every $1 spent during the first 10 years of its program by reducing hospitalizations for heart disease, strokes, respiratory diseases and cancer caused by tobacco use. A February 2013 study found that, from its launch in 1989 to 2008, California’s tobacco control program reduced health care costs by $134 billion, far more than the $2.4 billion spent on the program.
These results underscore how penny-wise and pound-foolish the states have been in shortchanging tobacco prevention and cessation programs. The states must increase funding for these programs, which have been slashed by 36 percent (approximately $260 million) since 2008. The states in fiscal year 2013 collected $25.7 billion from the tobacco settlement and tobacco taxes, but allocated less than two percent of it ($459.5 million) on these life-saving programs, according to a report issued in December by the Campaign for Tobacco-Free Kids and other public health organizations. Total state spending amounted to just 12.4 percent of the funding recommended by the Centers for Disease Control and Prevention.
While the nation has made enormous progress in reducing smoking, tobacco use remains the number one cause of preventable death in the United States, killing more than 400,000 Americans each year. To accelerate progress and win the fight against tobacco, the states must increase funding for tobacco prevention programs that are proven to save lives and save money. This week’s arbitration ruling provides another chance for many states to do so.
NOTE: The arbitration ruling applies only to tobacco settlement payments for 2003. The tobacco companies are still disputing how much they should pay for subsequent years. They reached a settlement of these disputes with 22 states earlier this year. The arbitration panel also ruled that six states (Indiana, Kentucky, Maryland, Missouri, New Mexico and Pennsylvania) did not “diligently enforce” the settlement provision, resulting in reductions in their payments. Some states may seek to challenge this decision in court.